European Central Bank moves to beat deflation with plans to cut interest rates and pump billions of euros into the eurozone

The European Central Bank is poised to cut interest rates and pump billions of euros into the eurozone economy as it battles to stave off deflation.

The institution is expected to lower its main interest rate from 0.25 per cent to 0.1 per cent or 0.15 per cent when it meets on Thursday.

It also looks set to cut its deposit rate, which stands at zero, into negative territory, meaning banks are charged for holding cash at the central bank. It is hoped the move will persuade them to lend more.

In the spotlight: Dramatic moves are expected from the European Central Bank at next week's policy meeting - after Mario Draghi suggested it was minded to do something in June